House committee digs up dirt on Teva, Celgene price-fixing schemes
Two bombshell reports from the House Oversight Committee reveal new details about Teva and Celgene’s efforts to implement major price hikes to boost company and executive revenues.
Released this week, the reports are the product of an 18-month investigation into pricing practices and were drawn from internal company documents and emails. Although pharma companies have long maintained that price hikes are necessary to help funnel money into R&D efforts, the reports reveal that Teva and Celgene raised the cost of their top-selling medications specifically to hit sales goals.
The 45-page report on Celgene, which has been acquired by Bristol-Myers Squibb, detailed how the company raised the price of its blockbuster cancer medication Revlimid 22 times since its approval in 2005 — from $215 per pill to now $763 per pill. The price hikes, which were pushed by the company’s CEO as a way to meet revenue targets, led to higher profits for the company and higher bonuses for its executives.
Internal documents also showed a concerted effort to keep competitors off the market. In one case, a Celgene executive bragged about not offering Revlimid at a discount to Janssen for clinical trials, in order to put “financial constraints” on the company’s ability to “simultaneously fund lots of trials.”
Teva, meanwhile, also installed an aggressive strategy to protect Copaxone from competition. At one point, Teva developed a more potent version of Copaxone and although executives privately admitted it did not work better, the company pressured doctors and patients to continue using the drug. Meanwhile, when a Teva employee said that she could not afford the $1,673 out-of-pocked bill for Copaxone, (compared to $12 for the generic Mylan version), the company made free samples available to her.
All told, the 55-page report says that Teva has raised the price of Copaxone 27 times since it was launched in 1997.
Notably, the reports content that neither company used substantial profits from the two drugs to fund clinical trials. Teva, for example, only pumped 2 percent of the $34 billion in revenue it received from Copaxone over two decades back into research.
The current CEOs of Teva and Celgene testified for the House Oversight Committee on Wednesday and were grilled by lawmakers about their history of price hikes.
